Market Munch 🍩| July 19 2022
Goldman succeeds where the other banks failed, Commodity pull-backs offer a breath of fresh air at the gas pump, and Europe feels the heat(wave).
Good morning Munchers!
Here is your daily dose of the news that matters, from Wall Street to Dalal Street - in 4 minutes and 52 seconds.
Let’s dive in.
What’s hot, what’s not?
Story Roundup
1 - Goldman hits earnings season out of the park with a cautious note. 🤔
One of the biggest boys on Wall Street reported a profit of $7.73 a share - absolutely smashing analyst expectations of $6.61 per share.
Not only that, their revenue figures also beat estimates - $11.9bn compared to the $10.7bn predicted by analysts.
This was enough to impress Wall Street, especially as the finance sector slows down. Goldman stock was up 4% intraday and closed the day green.
The environment for banks is looking challenging - JP Morgan, Morgan Stanley and Bank of America all reported earnings - and they all missed forecasts.
Dealmaking has seen a slump of late, and Goldman’s revenues were helped by a boost in it’s massive bond trading unit as the Fed hikes interest rates.
2 - Sliding petrol prices offer some salvation at the gas pump. ⛽
Petrol prices are slowly winding back from the record highs this summer as recession fears heckle markets.
Average prices at fuel pumps in America fell about 10% - from $5/gal to about $4.52/gal right now.
Retail petrol has dipped slightly in other markets too - and it’s a sign of the market pricing in a recession, however mild it may be.
This decline comes with a general battering of commodity markets. Wheat, to timber, to iron ore all fell sharply on concerns that major global economies could slow and demand could wane.
Gasoline is produced from refined crude oil. Benchmark gallon prices were trading at $3.30 a gallon wholesale - down about 25% from highs in the summer.
Guess the average Joe can breathe a little more. 😤
3 - Amazon has the prime-est of Prime Days with 300m items sold. 💵
Amazon’s held out till the last minute for their Prime Day - for a little boost of sales before earnings season, and it looks like it’ll pay off.
Prime members purchased 300m items this year, up from 250m last year.
Amazon doesn’t reveal the numbers until their earnings call, but they revealed that the highest-selling categories were household goods and consumer electronics.
It’s also interesting to see that consumers focused on groceries too, as inflation hampers household purchasing power.
Regardless - it’s still encouraging to see that the consumer demand has not waned or vanished - it’s just consumer tastes that have changed.
Looks like yet another Prime Day for a prime company. 🍎
4 - Europe wrestles with forest fires and heatwaves. 🔥
Europe is facing the brunt of the deadliest heatwave in a long while, which is fueling wildfires, derailing normal life, and breaking temperature records.
At least 6 European governments have declared a state of emergency - with loss of life being a very real scenario as communities and roads get caught up in wildfires.
Spain’s PM said it best - “Climate change kills people, our ecosystem and what is most precious to us.”.
This erratic change in weather is one of the signs of irreversible damage to the climate - and definitely not one that’s welcome to see.
Breaking records seems to be the new normal for the climate. 🤷
5 - Chinese property market balances on a knife’s edge. 🔪
One of UBS’s head economists once called the Chinese housing market “the most important sector in the universe”.
That’s lovely when times are great, but absolutely disastrous when it takes a turn for the worse.
Housing counts for about 30% for China’s $14.7tr economy, and there are signs of cracks in the armor.
Investors are constantly getting spooked by constantly reappearing COVID lockdowns as they face a mortgage payment showdown.
Homebuyers are more-or-less ‘boycotting’ mortgage payments on projects that are stalled because of the lockdowns.
And it looks like these cracks are finally touching the finance industry too - which some people say was “always” going to happen given the amount of collateral that loan books have with large real estate portions.
Aaaand that’s a wrap.
Thanks a ton for reading. Any feedback is open - positive or negative. Hit my line at aryaansh.rathore@gmail.com or https://www.linkedin.com/in/aryaansh/.